Home Editorial Editorial: The Need for Export Diversification

Editorial: The Need for Export Diversification

To boost its export revenue, Pakistan needs to increase its trade with all its neighbors

by Editorial

File photo. Rouf Bhat—AFP

In 2023, Pakistan earned $35.2 billion from exports of goods and services, with $8.3 billion (23.7%) coming from the United States alone. Exports to China, meanwhile, netted Pakistan $2.6 billion (7.5%), indicating the two nations comprise the bulk of the country’s export proceeds. For a country in perpetual economic crisis, this is troubling situation, requiring diversification to avoid over-reliance on any one entity. The most obvious addition would be exports to India, but ties between the neighboring nations hamper such attempts, despite both Prime Minister Shehbaz Sharif and Foreign Minister Ishaq Dar expressing a desire to “normalize” at the urging of the business community.

It is positive for Pakistan is recognize the need to increase trade with its four neighbors—China, Afghanistan, Iran and India—while maintaining ties with Western states. However, this could prove a tough balancing act, especially as trade with Iran always carries the threat of sanctions from the U.S., while ties with Afghanistan have deteriorated over its sheltering of terrorists involved in militancy in Pakistan. In the past fiscal year, Pakistan’s exports to India totaled $300,000, while those to Iran were a paltry $28,000. Trade with Afghanistan, similarly, slipped to $522 million, including $320 million in exports. Clearly, Pakistan must do much more to expand its trade ties with neighbors and partners in the Gulf Cooperation Council—Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates.

Pakistan’s trade with Western states is facilitated by trade concessions and preferential treatment to exporters, but there is no reason to believe the same cannot be achieved with our neighbors with some dedicated effort. Boosting legal trade would also help curb smuggling, a thorny issue for the incumbent government, which has repeatedly expressed dismay over smuggled oil from Iran and the massive losses it causes to the national exchequer. In an official visit to Islamabad last month, Iranian President Ebrahim Raisi vowed to increase trade between the neighboring nations to $10 billion; achieving this goal over the next five years could prove a significant feather in the government’s cap.

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